Last week, in a big fillip to the bottom of pyramid investing, pedigree valley investor Vinod Khosla unveiled a plan to reinvest his profits from SKS Microfinance’s stock-exchange listing in a social venture capital fund.
“Such related events reaffirm the faith of investors and promote entrepreneurs building sustainable businesses,” said Tripat Preet Singh, Managing Director, Sustainable Enterprise Fund, a social venture fund.
As the name suggests, Sustainable Enterprises Fund – an initiative sponsored by Ennovent, a for-profit enterprise – will look to promote entrepreneurs who advance disruptive innovations for sustainability at the base of the economic pyramid.
The early stage fund will invest under one-million dollar into sustainable businesses across five sectors – energy, food, water, health and education. But it will not provide seed capital for pre- development ideas as it prefers enterprises with a short-to-medium term operating history.
“Building on our broad expertise and leveraging our network, we will discover, finance and scale innovations that catalyze fundamental change to sustainable development,” Singh said.
Though the fund may broaden its horizon, it will initially focus on supporting entrepreneurs with innovations valuable to the bottom of pyramid in India.
Singh opined that more experiments were needed in propping up sustainable businesses even as traditional venture capitalists were constrained by their own ecosystem. “All traditional VCs have limitations to invest in these kind of sectors and that has created a gap in the system which can be filled by investors like us,” he added.
The fund’s mission is simple: To promote entrepreneurs who advance innovations for sustainability at the base of the pyramid. And, as Singh puts it: “It’s about giving someone a fishing rod, instead of a fish.”
On the investment pipeline, Singh said that there are good businesses to be seen in this space. “The idea is not only to invest, but solve a problem and that’s where the whole value lies,” says Singh, who currently manages the fund. The fund targets what is sometimes called the triple-bottomline – People, Planet, Profit. It tracks social, economic and environmental dividends along with short-to-long term financial returns.
The Social Enterprise Fund is currently in the process of fundraising and is currently warehousing commitments from a family office. Singh declined to divulge details about the corpus that they are targeting, but said that they will raise money from other third party investors.
As of now, the fund only has Tripat Preet Singh, who recently got promoted as the fund’s Managing Director, and is responsible for building the India team. Singh was most recently working as a senior associate with NEA-IndoUS Ventures, and focused on opportunities in clean-tech, education, healthcare, consumer services, retail, manufacturing and internet services.
Apart from Singh, the core management team consists of: Peter Scheuch- Founder and Managing Director (more than 10 years working as a full-time staff member and consultant for international development and environmental organizations such as CARE, IUCN, WWF and UNDP), Johannes Krahwinkler, Investment Director, ( over 15 years of experience in the Investment Banking/Corporate Finance and Private Equity business), Tom Schmittzehe, Business Development Director (10 years of experience focused in helping organizations achieve aggressive growth, both in the Private and Not-for-Profit sectors) and Leila Karnik, Network Director ( with ten years of experience in both social ventures and high-growth startups.)
There are also other funds like Omidyar Network and Acumen Fund which targets similar objectives. Omidyar, for instance, invests essentially in microfinance, education and such sustainable businesses in the countries of India and Africa.